Is the tech cloud about to rain?

Cloud computing has arguably revolutionised swathes of IT services, with Google Drive and Dropbox both being excellent examples of good services which just work as they say. However, as yet it is very difficult to know how much money “upstart” services which don’t rely on advertising actually generate in terms of profits (if any). The ubiquitous Dropbox for example has seen its valuation cut according to Zerohedge. Dropbox unlike Google or Amazon, does not actually have its own server base instead it rents capacity of all places from Amazon. Apparently Dropbox was valued at $10bn by it’s own investors recently and it is them who have now said that it will not fetch anywhere near this value in any IPO. This overall value masks the true level of investment which was closer to $600m (January 2014). Given the large user based that Dropbox has it would be very alarming if they had not been able to convert a reasonable percentage of free users to paid accounts. In the tech bubble of the late 90s many services were free (to a point); many of these services also failed or had to be bailed out.

The underlying economic issues aside cloud computing also faces serious issues when it comes to security and privacy or in the case of the US Government just plain snooping. So it remains to be seen if the rapid growth will continue or if overtime more and more people will switch to home-based local clouds. This would of course also effect the business model of services such as Dropbox. That said so far I know very few people who have fully dropped commercial cloud providers – although many are just using free rather than paid accounts.

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About Rod McCall

Rod McCall is a researcher in the field of human-computer interaction in areas such as augmented reality, mobile gaming in-car systems and virtual environments. He has a passing interest in economics after not being entirely convinced by the rubbish presented as fact during lectures on that particular subject while at uni.